inoculatedinvestor's blog

Valuehuntr.com is offering extra incentive to help the victims of the earthquake in Haiti. Please take advantage of this opportunity and contribute to the Red Cross through his site. A donation won't make up for past sins but will represent a charitable start to the new decade.

The eclectic set of topics discussed in this week's link's: Hank Paulson's bazooka, the debt to GDP point of no return, Wall Street bonus deferral, the toxic twins Fannie and Freddie, and of course prisoners.

This article addresses a recent study done by a couple of hedge fund managers regarding the performance of various asset classes during the inflationary 1970s. What performed best on an inflation adjusted basis during the 1970s? Stocks? Gold? Oil? Bonds?

Ben Bernanke delivered a speech yesterday that could mark a turning point in the Fed's views on and handling of potential asset bubbles. Despite Helicopter Ben's usual attempts to blame everyone else but the Fed for the housing bubble, at the very end of the talk Bernanke actually suggested that the Fed would consider using monetary policy to combat asset bubbles. What a start to 2010.

As the 'naughties' come to a somewhat anti-climactic close, it is important for those of us in the investment community to take stock of what new lessons have been learned, what immutable laws have been reinforced, and what changes in policy, strategy and execution need to occur in order to avoid a repeat of the booms and busts of the last decade.

In response to a piece penned by Tom Brown of bankstocks.com about Synovus Financial, I carefully go through his bullish arguments and point out areas in which we do not share the same outlook. In trying to assess the potential risks, the questions I try to answer are as follows: (1) Will SNV have enough capital to make it through the cycle without further diluting shareholders and (2) What is the probability that SNV does not survive this credit cycle?

Unable to find any compelling valuations among US bank stocks I have taken my search north of the border to find the best of the Canadian banks. Based on my initial research that bank is Toronto-Dominion Bank (NYSE: TD). While it may not be a buy at the current levels, this is certainly a stock to keep an eye on if this incredible market rally ever reverses.

I am back from my brief blogging hiatus and not surprisingly, all of the nutty things going on in the financial markets have not magically reversed themselves. So, after some separation from the markets I have made a list of the things I think make the least sense and would impact investors in a meaningful way if the current trends turned around.

Some things I am thankful for this year: John Hussman, The Baseline Scenario, AIG, inept government regulators, and of course, Goldman Sachs. Absent these I would have nothing interesting to write about. So, without further ado, here are some interesting links for those of you who are not enticed by the Cowboys vs. Raiders game.

The current debate in just about every financial and economic circle surrounds the fate of the dollar. Some argue that a weak dollar is great for US exports and thus investors should not worry about the recent decline. Others contend that a weak dollar will eventually be inflationary and drive up the price of necessities such as oil. Which side are you on?

Tired of the same old US-based bears such as Nouriel Roubini, Peter Schiff and Doug Kass? Sick of hearing the US is in deep trouble argument from Mark Faber and ex-pat Jim Rogers? Then, for those of you who are not familiar with the most outspoken Australian Nostradamus, let me introduce you to economist Steve Keen.

Friedrich von Hayek might have thought so. Hayek worried that during times of crisis the government would assume so much control that it would eventually have a negative impact on the economy and eventually turn all the people into serfs. My hope it that through sites like Zero Hedge we can help wake people up and avoid such an undesirable fate.

Disclaimer: The following set of links and associated cynical commentary touches on mature subjects and may not be suitable for some investors. Topics covered include: hyperinflation, sovereign default and yes, even investing in Zimbabwe.

For a change, this week I decided to only comment on links that suggest that everything in the world is rosy and that the US is already in the middle of an impressively sound V-shaped recovery. Too bad I couldn’t find anyone who argued either of those points credibly. Oh well, guess everyone will have to settle for yet another dose of reality.

So, it looks like Lloyds and RBS are going to get broken up into smaller, more manageable pieces by the Brits. I think it is clear that something similar is needed in the US to dismantle the banking oligarchy. Could it happen here? Well, maybe the follow the leader dynamic that occurred during the misguided attempt to ban short sales will play out in this case as well.